Figures released by Labour show real wages, that is wages minus inflation, have fallen in the UK by 3.2 per cent

Britain has suffered one of the biggest drops in real wages in the European Union over the last two years, according to figures released by the Labour Party.

Research commissioned from the independent House of Commons library showed real wages (wages minus inflation) in the UK fell by 3.2% between the third quarter of 2010 - when Chancellor George Osborne held his last spending review - and the third quarter of 2012, the same as Portugal.

Shadow chancellor Ed Balls MP said: "These figures show just how far Britain is falling behind the rest of Europe under this Government.

"A flatlining economy under David Cameron and George Osborne over the last two years has made British people worse off, but families, pensioners and businesses cannot afford another two years of falling living standards.

"Urgent action is needed in the Budget to kick-start our stagnant economy and help people on middle and low incomes struggling with the rising cost of living."